Hold off Buying that Home! Financial tips Before your First Property Purchase

Are you moving to Australia and looking to purchase your first home? That’s a great, mature decision! You must be both very excited and overwhelmed. As virtually all first home buyers will tell you, the process is indeed a pressuring and financially straining experience.

We’ll tackle a little inside information so you can sidestep the common Aussie buyer’s dilemma. Take note that buying your home is a long process and there’s absolutely no reason to rush it. Educate yourself on the process, and don’t be afraid to use recommendations from family and friends or enlist a real estate agent and mortgage broker.

Check your credit rating. Before you even start looking for a property in your chosen city in Australia or shop around for a mortgage, it’s crucial that you examine your credit score. Doing so will help you secure the best possible loan rate. This depends on the lending facility, but you’ll need a credit score of 740 or higher. By knowing the state of your credit ahead of time, you’ll be able to help yourself get some time to increase the rating before you begin looking at houses.

One of the best ways to improve your credit rating is by paying down your debt as well as always paying your bills on time. This may involve delaying your house hunt, but purchasing a house six months later is a sensible sacrifice to make to acquire a better mortgage rate.

Eliminating your debt. If you’re about to enter the housing market and you still have debt, most experts will recommend delaying your house hunt until you eliminate it. Not only will it be harder to pay down your debt after purchasing a house, but having pre-existing debt will also have an undesirable effect on the terms of your mortgage. Generally, you will be given a good mortgage rate if you’re debt-free.

Loan amount versus spending amount. Take note that just because a lender pre-approves you for a $700,000 mortgage, doesn’t mean you can acquire a house that’s worth $700,000. You must consider other factors that come with home ownership, such as monthly mortgage payments and closing costs. Don’t be hasty or irresponsible with your decision, and never allow an inflated pre-approved amount tempt you into buying a more expensive home than you can safely afford.

Familiarise yourself with the different home loan types. And find the best one that will suit your particular needs. It doesn’t take long for first-time homebuyers to start feeling overwhelmed by their options. This is why it’s recommended that you take your time to research common mortgage loan types online. When you have a better understanding of your options, you will feel more comfortable with the process.